A novel approach for rapid and sensitive detection of matrilysin (MMP-7, a biomarker involved in the degradation of various macromolecules) based on a polypeptide (JR2EC) functionalized reduced graphene oxide (rGO) field effect transistor (FET) is reported. MMP-7 specifically digests negatively charged JR2EC immobilized on rGO, thereby modulating the conductance of rGO-FET. The proposed assay enabled detection of MMP-7 at clinically relevant concentrations with a limit of detection (LOD) of 10 ng/mL (400 pM), attributed to the significant reduction of the net charge of JR2EC upon digestion by MMP-7. Quantitative detection of MMP-7 in human plasma was further demonstrated with a LOD of 40 ng/mL, illustrating the potential for the proposed methodology for tumor detection and carcinoma diagnostic (e.g., lung cancer and salivary gland cancer). Additionally, excellent specificity of the proposed assay was demonstrated using matrix metallopeptidase 1 (MMP-1), a protease of the same family. With appropriate selection and modification of polypeptides, the proposed assay could be extended for detection of other enzymes with polypeptide digestion capability.